Sustainable supply chain coordination under competition and green effort scheme

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Abstract
In supply chain (SC) context, many SC members make sustainability effort not only to help the environment but also promote the market demand. Under such a situation, effective strategies should be adopted to coordinate the members’ sustainability decisions such as carbon emission reduction and green effort decisions. This article makes contributions to the literature on SC coordination by proposing a novel model for coordinating sustainable supply chain (SSC) under competition. In this investigation, a manufacturer invests to reduce the carbon emissions and two retailers compete on investing in the green effort. Firstly, the profit of SSC members and optimal decisions are determined under the decentralised and centralised systems. Then, a three-party compensation-based contract is proposed for coordinating the SSC decisions and a Nash bargaining model is proposed to fairly share the surplus profit. The results indicate that the proposed contract not only improves the whole SSC profit and its members compared to the decentralised system, but also improves the whole SSC performance regarding sustainability. Therefore, the coordination contract is applicable and efficient from both economic and sustainability viewpoints.

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